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CONTACT: Amy Smorodin
July 11 , 2006
(202) 289-8928
The Role of Music Licensing in a Digital Age
PFF Releases Transcript of June Event on PERFORM Act

WASHINGTON D.C. - The quick pace of technological innovation and the popularity of digital content has put the spotlight on music licensing schemes and rate-setting. Are current classifications keeping up with technology? Do provisions in the "Platform Equality and Remedies for Rights Holders in Music (PERFORM) Act of 2006" ensure a balance in licensing while adapting to innovation? Participants at "The Role of Music Licensing in a Digital Age," an event hosted by The Progress & Freedom Foundation, explored these and related issues. In light of ongoing debate surrounding music licensing and converging media platforms, PFF is releasing a transcript of the event.

The panel, moderated by PFF Senior Fellow and Vice President for Communications and External Affairs, Patrick Ross, featured perspectives from artists' representatives, distributors, licensing experts and consumer electronics makers. Participants included Intellectual Property Attorney Christian Castle; Mitch Glazier, Senior Vice President of Government and Industry Relations for the Recording Industry Association of America (RIAA); Lee Knife, General Counsel and Director of Business and Legal Affairs for the Digital Media Association (DiMA); and Michael Petricone, Vice President of Government Affairs at the Consumer Electronics Association (CEA).

Ross began the program by briefly describing the "PERFORM" Act, including its "attempts to distinguish between the performance license and a distribution license, stating that a recording device that has TiVo-like characteristics, such as recording by time or program, does not require a distribution license." This distinction between the performance and distribution license, and how it applies to new combination satellite radio receivers and mp3 players, was extensively debated at the event.

In his opening remarks, Glazier of RIAA acknowledged that media platform innovation is healthy for the music industry but stressed the need for a fair licensing system and adequate compensation. "We think that if you're talking about fair use... where you're recording by time, program or channel, you don't need a license for that. However, if you're talking about substituting [for] a sale by offering a consumer something that they can keep where they otherwise would have paid for [the music]... then you do need a license," Glazier explained. Petricone of CEA strongly disagreed with Glazier's interpretation of how current licensing laws apply to the satellite radio receivers. "This is like recording off the radio. You can't choose what you get to hear... You can't move the songs off the device or burn them to a CD or move them to your computer, and they disappear. They go poof if you stop your subscription," he explained. Petricone also stated the device allows time shifting of content by users and is covered by the Audio Home Recording Act. He argued that the device makers already pay royalties on each device sold and should therefore not be required to pay additional licensing fees.

Knife of the Digital Media Association voiced support for the PERFORM Act but felt more clarity was needed. "We'd like to see the Act address the idea of interactivity and try to clarify some of the issues around the various technologies in the media. And more clearly define what is interactive and statutorily enabled radio and Internet radio versus what is truly interactive and can be deemed substitutional for the sales of records," Knife stated.

Castle, an intellectual property attorney in the music industry, stressed the need for artist compensation. "[Artists] expect to get paid for their music. I think that is sort of a fundamental fairness question that has to be looked at whenever you're looking at devices, services, or anytime anybody makes money off my clients' music. I think we have a reasonable expectation of getting paid," explained Castle. Castle also voiced his opinion on the satellite radio devices mentioned above, stating, "[I]t seems very obvious to me that these devices are distributions of permanent copies."

Initial panel remarks were followed by a spirited panel debate and questions from audience members. Complete statements from the panelists and questions from attendees can be found in the event transcript.

The Progress & Freedom Foundation is a market-oriented think tank that studies the digital revolution and its implications for public policy. It is a 501(c)(3) research & educational organization.



The Progress & Freedom Foundation